Paper Trading Your Algo
This guide walks you through paper trading your algo with Datafye. Paper trading allows you to test your algorithmic trading strategies with simulated execution using real market data, without risking actual capital. The approach you take depends on whether you're using your own containers or Datafye's managed Algo Container.
Choose Your Approach
Set up paper trading with your own containerized algo environment, giving you complete control over your technology stack.
Best for:
Developers with existing algo infrastructure
Teams with custom frameworks and tools
Use cases requiring specific languages or libraries
Maximum flexibility and control
You'll learn:
Configuring broker connections for paper trading
Connecting your containers to the Broker Connector API
Placing and managing paper trades via API
Monitoring positions and portfolio
Risk management and controls
Analyzing paper trading performance
Scenario: Trading: Data Cloud + Broker
Set up paper trading with Datafye's managed Algo Container and SDK, with integrated broker connectivity and monitoring.
Best for:
Developers using the Datafye Algo SDK
Teams wanting integrated development tools
Use cases leveraging SDK abstractions for order management
Focus on strategy logic, not infrastructure
You'll learn:
Configuring broker connections in algo descriptors
Using SDK APIs for order placement and management
Implementing position tracking with SDK abstractions
Risk management through SDK controls
Monitoring and analyzing performance
Best practices before going live
Scenario: Trading: Full Stack
What is Paper Trading?
Paper trading simulates real trading execution without using actual capital:
Real market data - Uses live market prices for realistic simulation
Simulated execution - Orders are filled based on market conditions but no real money moves
Full order lifecycle - Supports fills, partial fills, rejections, just like live trading
Position tracking - Maintains positions and portfolio state identically to live trading
Risk-free validation - Test your strategy behavior without risking capital
Why Paper Trade?
Paper trading is essential before deploying real capital:
Validate strategy logic - Ensure your algo behaves as expected in real market conditions
Test order management - Verify order placement, modification, and cancellation work correctly
Verify risk management - Confirm position sizing and risk controls operate properly
Build confidence - Gain experience with your strategy's behavior before going live
Identify issues - Discover edge cases and bugs without financial consequences
What You'll Need
Before starting, ensure you have:
Datafye Trading Environment provisioned - Either Trading: Data Cloud + Broker or Trading: Full Stack
Broker account with paper trading - API credentials for paper trading mode (e.g., Alpaca paper trading, Interactive Brokers paper account)
Broker credentials configured - Credentials set up in your broker descriptor
Development environment - Your containers (own) or SDK setup (Datafye)
Paper Trading vs Live Trading
Paper Trading (all deployment models):
Available on Local (Standalone) and Distributed Self-managed AWS deployments
Simulated execution, no real capital
Use for development and validation
Live Trading (Datafye Managed only):
Only available on Distributed Datafye Managed deployments
Real execution with actual capital
Requires Datafye Ops to provision
Must validate thoroughly with paper trading first
Live Trading: Local and self-managed AWS deployments only support paper trading. For live trading, you must use a Datafye Managed deployment provisioned by Datafye Ops. Contact Datafye to request a managed deployment for live trading.
Related Documentation
The Broker Connector - Understand Datafye's execution infrastructure
Broker Descriptors - Configure broker connectivity
Trading: Data Cloud + Broker Quickstart - Provision a trading environment
Trading: Full Stack Quickstart - Provision with SDK support
Last updated: 2025-10-22
Last updated